Stock Market Recommendations for the Week Starting March 3, 2025

According to Motilal Oswal Financial Services Ltd, the top stock picks for the week are HDFC Bank and Max Healthcare. Let’s delve into why these stocks stand out.

HDFC Bank: A Strategic Choice for Investors

HDFC Bank is set to benefit from the RBI’s decision to lower risk weights on bank loans to NBFCs and MFIs, which eases capital constraints and improves credit flow. This strategic move is expected to enhance loan growth, with a projected CAGR of 10-13% over FY26-27, while optimizing capital allocation. The bank’s focus on high-yielding retail and commercial loans, along with improved deposit mobilization and reduced reliance on high-cost borrowings, will aid in maintaining NIM stability at around 3.4%.

With strong asset quality, indicated by a GNPA of 1.4%, and RoA/RoE estimated at 1.8%/14.2% by FY27, HDFC Bank remains well-positioned for sustainable expansion.

Max Healthcare: A Robust Performer with Expansion Potential

Max Healthcare delivered a strong 3QFY25 performance, with network revenue growing 34.9% YoY to INR22.7b, driven by a 7% increase in ARPOB (Average Revenue Per Occupied Bed) and a 9% growth in In-Patient volume. EBITDA rose by 32.7% YoY to INR6.2b, supported by operational efficiency and the scale-up of newer units. Notably, Max Dwarka achieved EBITDA breakeven within six months, while Lucknow and Nagpur hospitals showed robust growth.

Looking ahead, MAXH plans to commission a 500-bed Thane hospital by CY28, enhancing its long-term growth prospects. We reiterate a BUY recommendation, valuing the stock at 35x 12M forward EV/EBITDA, reflecting its strong execution and expansion potential.

Disclaimer: The opinions, analyses, and recommendations expressed herein are those of the brokerage and do not reflect the views of The Times of India. Always consult with a qualified investment advisor or financial planner before making any investment decisions.